Recent Posts

About

Bruce came to personal finance writing the old fashioned way: he didn't have much money, but wanted to do cool things. Clearly, some creativity was in order. From traveling around Europe to paying for a wedding, moving to New York to raising a child, he's figured out how to have fun without spending much money. In the process, he's also learned a few things about how politics and economics can help (or hurt) middle class finances. As DailyFinance's senior features writer, Bruce gets to combine his two favorite things: learning how the world works and explaining what he's learned to his readers.

BP's (BP) Gulf Coast oil spill is shining a harsh light on one corporation's ability to wreak environmental havoc, but the Deepwater Horizon disaster is just the latest injury inflicted on Mother Nature by careless businesses.

BP has been called on the carpet, but many companies have been able to minimize or avoid financial responsibility for their pollution. The British energy giant's June 16 agreement to create a $20 billion fund to compensate the spill's victims is unusual, and it raises an interesting question: Where does BP's payout rank compared to previous settlements and penalties for environmental devastation?

The quick answer is that BP's huge fund immediately vaulted it from the No. 3 to the top of this shameful pantheon. Yet, while the energy giant is now No. 1, it's far from being the only company that has put profit before environmental safety.

In the following gallery, we've compiled a list of the top 10 corporate payouts for environmental damage. To create this list, we looked at the largest pollution disasters and devastation in recent history, and explored which entities ultimately paid for the cleanup. We didn't adjust for inflation, which means that PEMEX's 1979 Ixtoc 1 oil spill in the Gulf of Mexico was pushed off the list. We also didn't include cases that are still in litigation; Honeywell (No. 5) and General Electric (No. 8) could eventually appear on the list multiple times once some large cases are settled.

In all too many cases, we found that, while corporations were often quick to poison the environment, they tend to be very slow when it comes to fixing their mistakes. (Story continues after the gallery.)

As BP sets aside billions to clean up the Gulf, here is our list of the largest pollution payouts in corporate history.

Gerald Herbert, AP

Charlie Riedel, AP

Oil Slicks and Slick Lawyers

In addition to its new $20 billion escrow account, BP has already spent $1.6 billion on cleanup and has set aside $100 million to compensate laid-off oil workers in the Gulf. By comparison, the total settlement for No. 2 on our list -- Exxon (XOM) -- was $3.5 billion, just 16% of BP's payout.

This enormous gap highlights a key aspect of the environmental payoff list: In most cases, the companies involved managed to reduce -- or even erase -- settlements through years of legal stalling and courtroom chicanery. Exxon's paltry $500 million reimbursement to victims of the Valdez oil spill was finalized in 2009, 20 years after the calamity. By that time, the company's payoff had been whittled down to 10% of the original award -- and 8,000 of the original claimants had died.

While Exxon's stalling is impressive, the master of litigation may well be No. 3 on the list, Union Carbide (DOW). Four days after the company's 1984 industrial accident in Bhopal, India, its CEO, Warren Anderson, was arrested by Indian police. After making bail, he fled the country, telling reporters "House arrest or no arrest or bail, no bail, I am free to go home. . . . There is a law of the United States. . . . India, bye, bye, Thank you."

When he and other Union Carbide officers were later summoned to appear in Indian court, the company claimed that as an American corporation, it wasn't subject to Indian jurisdiction -- and, apparently, neither were its officers. The U.S., which has an extradition treaty with India, has repeatedly refused to send Anderson and his fellow fugitives back to Bhopal, and the U.S. Supreme court declined to hear the case, asserting that Indian citizens could not seek damages in a U.S. court. Ultimately, the victims, who had originally filed a claim for $3 billion in damages, settled for $470 million.

Armies of the Night

It's worth noting that some of the biggest polluters in history didn't make it onto our list of corporate do-badders because they're governments. For example, the second-largest oil spill in history occurred when Iraqi military forces tried to foil an armed landing by American soldiers by opening the release valves at the Sea Island oil terminal on the Persian Gulf. They eventually dumped an estimated 462 million gallons of crude, killing thousands of fish and birds and leaving several inches of oily sediment that remain to this day. No payout was ever assessed, and the spill was never cleaned up.

But even when governments aren't at war, they tend to be heavy polluters. By one measure, the U.S. federal government is the biggest environmental offender: Of the 1,623 Superfund cleanup sites, 225 are directly tied to the government or the military. The next-nearest offender, Honeywell (HON), has 128 Superfund sites.

Speaking of Superfund sites, the growing public outrage at corporate pollution has led to quicker government action and ever-increasing payouts. The whole concept of a Superfund owes its existence to the 1978 Love Canal disaster, which brought the danger of toxic waste squarely to the public's attention. However, it took 16 years for the EPA to reach a settlement with Occidental Chemical, the company responsible for the waste. And the ultimate payout -- $129 million, and not quite enough to make it into our top 10 -- was just 39% of the $333 reward that Erin Brockovich helped get from Pacific Gas and Electric (PGC), No. 5 on our list, the following year.

In fact, 70% of the payouts on this list were made in the past 10 years, and if Honeywell's and GE's (GE) multiple cases were put on this list, that number would rise to 90%.

The simple, hopeful truth is that, while the great age of polluting may be far from over, it has certainly gotten a lot more expensive. Maybe that will get at least some would-be polluters to clean up their acts.